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Subject: |
Update on California |
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To: |
Agents Licensed in California |
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From: |
Denise Hardin, Senior Vice President |
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Thank you for all that you do
to serve State Farm® customers in California. As we’ve discussed in our
California Update calls, State Farm General Insurance Company’s (SF General)
financial picture is concerning.
Despite ceasing writing new
Fire business last May and implementing rate increases in several product lines
this year, the financial strength of SF General continues to deteriorate.
Although there haven’t been
significant California wildfire losses for several years, large underwriting
losses and growing risk exposure has resulted in surplus of less than 50 cents
for every dollar of risk we face today. SF General’s financial strength is less
than a quarter of what it was in 2016. Even factoring in the May 2023 action
and the approved rate increase, the financial picture for SF General is
projected to get worse in 2024.
As a result, we must take
some difficult but necessary underwriting actions that will unfortunately
impact some of our existing customers.
As shared during today’s call, State Farm General will take the
following actions to further reduce our
exposure in California:
- Non-renew
approximately 30,000 homeowners, rental dwelling and other property
insurance policies (residential community association and business owners)
beginning July 3, 2024.
- Withdraw from
offering commercial apartment policies, which will result in the
non-renewal of all those policies (approximately 42,000) beginning Aug.
20, 2024.
Additionally, State Farm
General will also:
- Remove
commercial earthquake coverage for all remaining Business Lines Fire
policies with the endorsement, excluding farm/ranch.
- Non-renew
business owners policies for tobacco product stores and telephone/cell
phone stores & installation.
Combined, these actions
represent just over 2% of Fire policies in the state.
We realize this will impact many of you and the
relationships you have built. This decision was not made lightly and is
necessary to improve the affiliate’s financial strength to ensure we can help
more people in more ways, forever. We’ll continually evaluate our approach
based on changing market conditions.
Action requested
Please review the following
resources in preparation for customer questions:
·
Update on California on statefarm.com®
·
3/20/2024 letter from
State Farm General to the California Department of Insurance
·
State Farm General
underwriting actions on Agency Hub News
·
*Key Messages and Customer
FAQ on
the Western Market Area site’s California page. The Key Messages include
details about the agent policy listings that will be available in the Campaigns
tab of ECRM beginning March 20.
Your market area leadership
is also available as a resource. As always, please redirect any media inquiries
to Sevag Sarkissian.
Message points
The
following are approved messages agents can share verbally with customers:
- State Farm
General Insurance Company is taking necessary actions to improve its
financial strength related to California:
- State Farm General will
non-renew approximately 30,000 homeowners, rental dwelling and other
property insurance policies (residential community association and
business owners) beginning July 3, 2024.
- Additionally, the company will
withdraw from offering commercial apartment policies with the non-renewal
of all of those approximately 42,000 policies beginning Aug. 20, 2024.
(This is insurance for apartment owners, not renters insurance.)
- The non-renewal process will
take over a year to complete. (through July 2, 2025, for impacted
homeowners, rental dwelling, residential community association and
business owners policies and until Aug. 19, 2025, for apartment policies)
- State Farm independent
contractor agents licensed and authorized in California will continue to
service impacted policies up until their last date of coverage.
- State Farm agents will also
continue to service policies not impacted by these decisions.
- We’re mindful of
the impact to customers and will continue to work constructively with the
California Department of Insurance, Governor’s Office and policymakers to
address needed market reforms and help build market capacity in
California.
- This decision is unique to
California and the challenges there.
Thank you again for your
ongoing commitment as we continue to address our challenges in
California.
For more information
- For questions about the
philosophy of these underwriting actions and agent impacts, contact your
sales leader.
|
C: |
Senior Executive Council; Sales Executive
Office; Western Market Area Executive Team; P&C Underwriting/Billing
Strategy, Actuarial & Modeling Executive; Angela Martin; Adam Swope; Jeff
Clinch; Ken Doss; Sales Leaders of agents licensed in California; WMA Agency
Administration Leaders and AFS Function Manager/Managers; ECC PLCC/BLRC and
Billing Directors; Greg Reynolds; Nathan Miller; Tisha Strand; Debra
Billings; Sheri Kurkowski; Laura Campbell; Marty Wietfeldt; Melinda Clark;
Laura Triplett; Anne Bennett; Lynn Whitlow; Chris Stucky; WMA Executive
Assistants |
FOR
INTERNAL STATE FARM USE ONLY
Contains
information that may not be disclosed outside State Farm without authorization
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